American University in Afghanistan Under Attack; Earthquake Kills at Least 120 in Italy; Latest Polls Show Trump Leads Clinton in Arizona, Tied in North Carolina; Interview with Senator Chris Coons; Trump Reaches Out to Minority Voters; Iranian Vessels Came Within 300 Yards of U.S. Destroyer; Looming Battle Threatens to Amplify Refugee Crisis in Iraq. Aired 5-6p ET

Aired August 24, 2016 - 17:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[17:00:54] BRIANNA KEILAR, CNN ANCHOR: Happening now, breaking news. Under attack. Explosions and gunfire send students running for cover as terrorists storm the American University in Kabul. There are multiple casualties and people are reportedly trapped. U.S.-led troops are advising local forces as diplomats work to accountant for American citizens.

And Trump's target. Donald Trump steps up his attack on the Clinton Foundation as the Clinton campaign defends the embattled charity. But Trump may have to play defense as our new polls show Hillary Clinton gaining ground in two crucial states.

Wolf Blitzer is off today. I'm Brianna Keilar. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN Breaking News.

KEILAR: Breaking news. Explosions and gunfire send students rushing out of classes at the tightly guarded American University in Kabul. At least one person is dead, close to two dozen wounded at this point. And witnesses and officials report terrorists are holed up in at least one building. And there are people trapped on campus. U.S. diplomats are working to account for Americans in the Afghan capital. And U.S.- led troops were advising local forces at the scene.

Meanwhile in Italy, a desperate effort to find survivors in the ruins of villages leveled by a powerful earthquake. Residents are clawing through with their bare hands, shouting out names of loved ones. Italy's prime minister says at least 120 people are dead.

And our new poll showed Donald Trump and Hillary Clinton are neck-and- neck in North Carolina, a crucial battleground state, while Trump holds a slim lead in Arizona which tends to lean Republican. Both states are critical to Donald Trump's chances in November. And as he hints about a softer stance in immigration, Trump today is stepping up his attacks on Clinton saying, quote, "She sold favors and access" via the Clinton Foundation.

I'll speak to Democratic Senator Chris Coons, and our correspondents, analysts and guests have full coverage of the day's top stories. We begin with the bloody attack on the American University in Kabul, Afghanistan. CNN's Brian Todd has the latest on this.

What are you learning, Brian?

BRIAN TODD, CNN CORRESPONDENT: Brianna, tonight U.S. officials are still scrambling to see if any Americans were injured or killed in this tack. We know of at least one person killed so far. An Afghan guard and 21 wounded according to a local hospital.

(BEGIN VIDEOTAPE)

TODD (voice-over): An attack without warning, reportedly with an explosion followed by gunfire. One witness tells CNN he was waiting for an evening class to begin at the American University in Kabul when there was an enormous explosion near the entrance. Then shooting and screaming. The witness says he saw some people injured by broken glass, others wounded by bullets. This student describes the fear and panic on campus.

ABDUL KHABIR, STUDENT, AMERICAN UNIVERSITY OF AFGHANISTAN (Through Translator): After the explosion happened, we heard gunfire and I lost my nerve. We have an emergency exit and we got out of the university that way.

TODD: A chemistry professor who has a son and daughter in the U.S. told CNN there was black smoke, the lights seemed to go out, and everyone was running and shouting. Witnesses reported attackers got into at least one building.

BILAL SAWARY, JOURNALIST IN KABUL: I've had my cousins, my relatives, and my friends have been stuck inside classrooms when the attack happened. But one of my family members who was there told me that the attackers had maps. They were drinking Red Bulls clearly, aimed at staying for as long as they could, and that some of them were tossing hand grenades.

TODD: Local TV reports that after a crisis response unit entered the university more gunshots were heard.

(END VIDEOTAPE)

TODD: Now we're told that at this hour insurgents are still on campus there in Kabul. Tonight an Interior Ministry spokesman said a police operation to search the campus for the attackers was set to begin, but it is still not clear yet if the police have gained the upper hand or not.

[17:05:05] Officials tell CNN people are still trapped inside the buildings -- at least inside some buildings. American officials say a few U.S. personnel are involved in responding to the attack in Kabul but they are only acting as advisers -- Brianna.

KEILAR: Brian Todd, thank you for that report.

Let's bring in now CNN global affairs correspondent, Elise Labott.

You have been talking to people in Kabul and at the State Department. What are you hearing?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: Well, first of all, Brianna, as Brian said, it's an ongoing situation. And people are still trapped inside. Now we don't really feel this is being targeted against Americans. There aren't a lot of Americans that are studying there. It's an important symbol of the U.S.-Afghan partnership, but it's mostly Afghan students. However, there are some U.S. faculty that could be trapped inside and the U.S. State -- the State Department and the embassy are trying to find that out. And what we do understand is that all U.S. personnel at the embassy have been accounted for but still trying to find out if there are any Americans, faculty members or possibly students that could be trapped inside.

KEILAR: Because we do know there was an American professor, an Australian professor who were abducted, still whereabouts unknown.

LABOTT: That's right.

KEILAR: This is just a week or so ago. And the big question is then, who is responsible for this. Do we have any sense of that?

LABOTT: Well, sources are telling me, of course, they don't know yet. There hasn't been a claim of responsibility, but all indications point to the Taliban. As you said, you had that kidnapping just about two weeks ago. There have been a rash of Taliban kidnappings and bombings. And as we're saying this is an important symbol of the future of Afghanistan. 100 Afghan officials have come out of this university, a lot of women have studied there, and so officials are saying this is a perfect target for the Taliban in terms of what they're targeting which is really the future of Afghanistan and that important partnership with the U.S.

KEILAR: All right. Elise, we know you'll stay on this. Thank you so much for your report.

Let's turn now to the breaking news out of Italy where at least 120 people are dead following a massive earthquake there. Historic towns have been reduced to rubble. The search for survivors is just fraught with danger now as aftershocks rumble across the region.

Our senior international correspondent Frederik Pleitgen is joining us now from the heart of the devastation in Italy.

Fred, give us the latest.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, Brianna. I am here in Amatrice. It was the epicenter of where this earthquake happened. And as you can see behind me, the search for survivors is still very much ongoing here in this Italian town. Even in the middle of the night, they have to bring in some very heavy equipment -- to through some of the rocks and also some of the buildings that really there's only shells of those buildings left.

They believe that in the first 72 hours they might still be able to save people here. It's been an absolutely tragic and devastating day here in this small town. Let's have a look.

(BEGIN VIDEOTAPE)

PLEITGEN (voice-over): With the death toll rising and time running short, scenes like this throughout central Italy. A woman trapped covered in chunks of concrete.

UNIDENTIFIED MALE: Are you able to breathe a bit? Only a bit. The important thing is to stay calm.

PLEITGEN: Rescue workers and search dogs are combing through rubble looking for anyone still alive. Many of the steep roads are blocked with debris, making access to the hardest hit areas more difficult.

The epicenter of the 6.2 magnitude earthquake was just outside Amatrice in central Italy. It struck at a very shallow depth which amplified its power.

UNIDENTIFIED FEMALE: The house was trembling, shaking. It got more and more intense. Absolutely appalling noise, clinking, thundering, sort of rumble. It all felt like someone had put a bulldozer to the house to try to knock it down.

UNIDENTIFIED MALE (Through Translator): I took my wife by the hand and in the dark, we tried to find our way out. I felt debris under my feet, I felt rocks, pieces of broken furniture and overturned furniture under my feet. As we got out, we saw all the people outside. There was shouting and crying.

PLEITGEN: The initial quake was followed by a 5.5 magnitude aftershock about an hour later. The jolts felt as far away as Rome, nearly 100 miles to the south. Racing against time and nightfall, rescue teams with mobile medical units performing triage on the spot so they can be transported to hospitals.

(END VIDEOTAPE)

PLEITGEN: And, Brianna, even though the rescue workers here of course are still working around the clock to try and save people from the rubble, more often than not they aren't successful. We were on hand twice when they actually pulled dead bodies from buildings. Just like the one that you see behind me. And we saw people just breaking down. Family members who simply said they couldn't go on anymore.

And the other thing of course that these people also deal with is because they're so scared of the aftershocks, many of them say they're definitely not going inside any sort of buildings.

[17:10:03] They're going to spend the night outside, of course fearing that there could be more earthquakes here in this region.

KEILAR: Aftershocks almost as strong as the initial earthquake, we should point out as well.

Fred, thank you so much for that report from the scene there.

Now we also have breaking news in politics. Our latest polls showed Donald Trump and Hillary Clinton running even in North Carolina, that's a key battleground state, while Donald Trump holds a narrow lead in Arizona which is traditionally Republican tilting.

PHIL MATTINGLY, CNN CORRESPONDENT: Well, Brianna, as you know quite well, this was supposed to be the quiet period for the Clinton campaign. A calm before the storm, if you will. Hillary Clinton trading public events for fundraisers. And as one Democrat told me today, we thought we could all be on vacation right. Instead the campaign is engulfed in a firestorm. A firestorm they say isn't based in facts at all.

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): Tonight Hillary Clinton's campaign is firing back as pressure grows over pay-to-play allegations at the Clinton Foundation.

MATTINGLY: The campaign is attacking the Associated Press report that claims during the time she was secretary of state, more than half of the people outside government Clinton met with were foundation donors. But the campaign says, the AP analysis excluded meetings with foreign government officials.

ROBBY MOOK, HILLARY CLINTON CAMPAIGN MANAGER: To pull all of them out of the equation, cherry-pick a very small number of meetings is pretty outrageous.

MATTINGLY: Her campaign is also defending the purpose and benefits of the foundation's work.

BRIAN FALLON, HILLARY CLINTON CAMPAIGN SPOKESMAN: If any American voter is troubled by the idea that the Clintons want to continue working to solve the AIDS crisis on the side while Hillary Clinton is president, then don't vote for her. But I think most voters are pretty reasonable on that point.

MATTINGLY: The AP found no evidence of Clinton doing anything unethical and many of the people whom she met with were leaders of major charitable groups who have been honored by and met with Republican and Democratic members of Congress. But the mere appearance of impropriety has given ammunition to Donald Trump as he continues to push for a special prosecutor to investigate the matter.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: Hillary Clinton ran the State Department like a failed leader in a third-world country. She sold favors and access in exchange for cash.

MATTINGLY: The Clinton campaign also getting an unwelcomed surprise. The disclosure of a U.S. Army training slide that labels Clinton as well as retired General David Petraeus as insider threat for their lax information security practices. The slide had not been approved by the unit's leadership, according to a spokesperson, and has since been removed.

Meanwhile the Clinton campaign is trying to shift its focus back to Donald Trump.

BENENSON: I think if you want to be hammering somebody in this race day in and day out about disclosure, it's a man who put out a two- paragraph letter from a doctor, whose own credentials appeared bogus on his own letterhead, a man who has refused to release his tax returns.

MATTINGLY: The candidate herself remained off the trail. She seeks to close out August with a massive fundraising haul. A late-summer swing that aides say has brought in tens of millions of dollars. All as she prepares to launch a new attack against Trump Thursday. This time on his newly minted campaign CEO Stephen Bannon and his close ties to the fringe alt-right movement.

MATTINGLY: And her campaign hitting back Trump on the medium may dominated so far -- TV ads.

UNIDENTIFIED MALE: You know, Donald Trump says he'll make America great again while he is taking the shirts right off of our backs.

(END VIDEO CLIP)

MATTINGLY: And Brianna, ads like are the exact reason why Clinton has been off the campaign trail and it's been a fruitful endeavor, I'm told. Aides saying just in the last three days, she's picked up as much $20 million. Again that money is going to be necessary because the Trump campaign is convinced they have a line of attack that works, one that's very effective, and frankly, Brianna, one that's frustrating a lot of Democrats. Still the Clinton campaign saying they are going to fight back and fight back hard. They don't believe this story is real at all and we're going to see the pushback intensify even more in the days ahead.

KEILAR: All right. Phil Mattingly, thank you for that report.

Joining me now is Democratic Senator Chris Coons of Delaware. He is a member of the Foreign Relations Committee. He's also an early supporter of Hillary Clinton. I want to ask you -- I want to talk to you, obviously, Senator, about

Hillary Clinton and the state of the race here, and what she has going on in her campaign. But I also want to ask you, because you are a member of the Foreign Relations Committee, I want to see what you're learning about this attack today at the American University in Kabul.

Are you getting any sense of who could be behind this?

SEN. CHRIS COONS (D), FOREIGN RELATIONS COMMITTEE: Well, Brianna, I haven't gotten any briefing yet about the tragic attack in Kabul, in Afghanistan, on the American University. I will be asking for a briefing soon. And obviously all of us are troubled by this and our thoughts and prayers go out to those who are the victims of this attack.

[17:15:05] We still have a lot of hard work to do in Afghanistan and this is a reminder of the challenges that we face around the world as we try and fight groups like the Taliban who represent terrorism and who oppose America's interests and values.

KEILAR: And now I want to ask you about Hillary Clinton and the Clinton Foundation, and the issue that her campaign is now having fighting back attacks from Donald Trump. We heard Bill Clinton say earlier this week, he's going to step off of the board. You're going to see corporate donors, foreign donors, they're not going to be able to take part. Of course the work is still going to continue.

I guess my question is, why not sooner? You look at some of the work the Clinton Foundation does, no doubt it is good when it comes to HIV, AIDS, and providing low-cost medications to many people suffering that terrible disease around the country, and yet they have a responsibility of course to these programs that they're doing as well as to the American people while she was in a position in the U.S. government, and potentially will be again.

Why do this at this point and why not do more if she becomes president?

COONS: Well, Brianna, let's be clear. What's going on here is that Donald Trump is slumping in the polls and making his latest outrageous and baseless attack on something. The Clinton Foundation that has widely been recognized by Republicans and Democrats alike as being very effective and making a huge difference around the world.

I chair the African Affairs Subcommittee of the Foreign Relations Committee my first four years in the Senate. And I have gotten to see in person the remarkable and positive, even life-saving work that the Clinton Foundation has done --

KEILAR: Why not stop -- Senator, I hear you on that. But I'm asking you, why not stop taking those donations now or before now?

COONS: Frankly, I think, Brianna, the larger questions is why should they have to stop or slow down their positive work for humanity? Neither Bill nor Hillary Clinton take a salary from the Clinton Foundation. There's no suggestion, no evidence that the meetings that were referenced in the introduction somehow affected foreign policy.

(CROSSTALK)

KEILAR: You think that a sitting president should be able to have a foundation where foreign governments can donate tens of millions of dollars and that that doesn't present some form of conflict of interest?

COONS: Look, I respect fact that the Clintons are going above and beyond, are taking proactive steps, but frankly the Clinton Global Initiative has done tremendous things. Has brought real innovations to public policy and the work of the Clinton Foundation has brought down the cost of medicines for Malaria and for HIV/AIDS, has delivered anti-HIV/AIDS medications to 11 million people around the world. So I would hate to see them have to shut this down completely.

I'll remind you, this is part of a double standard. When Senator Bob Dole of Kansas ran for president, nobody was asking questions about the International Red Cross which his wife was running at the time. When former President George H.W. Bush ran the Points of Light Foundation, there were no questions asked about conflicts of interest.

I think this is part of a long running double standard. And frankly, there is no evidence that the meetings that have been referenced in the AP had an impact on the State Department or on Secretary Clinton's conduct of foreign policy.

KEILAR: There hasn't been, and -- but I do want to ask you about, though, the appearance, though, of a conflict of interest. I do have to get in a quick break.

Senator, Coons, stick with me. We're going to talk about this right after the break.

COONS: Sure.

(COMMERCIAL BREAK)

[17:23:01] KEILAR: And we are back now with Democratic Senator Chris Coons of Delaware.

Sir, thank you so much for joining us again. So you have the Clinton campaign taking issue with this report from the AP. This is in part what we were talking about because this report claims that during the time she was secretary of state, more than half of the people outside of government that she met with were donors to the Clinton Foundation, combined to the tune of millions of millions of dollars. And the campaign says the analysis of course did not include meeting with U.S. federal workers, foreign government officials. There were many meetings with those folks, for instance. And they say there is no indication the Clintons personally profited from any of this.

I hear what you're saying. You're saying the foundation does good work. We know that. But you're saying there is a double standard. At the same time, you can't really argue that this isn't affecting how people, how voters may be perceiving Hillary Clinton and how she does business with her family foundation. I mean, you must understand that what this really comes down to is, double standard aside, if this is something that makes voters uncomfortable, isn't it incumbent on Hillary Clinton to take measures -- to have taken measures?

COONS: That's right, Brianna. And that's why the Trump campaign is pushing forward these claims and these allegations. It does have an impact on voters' perception of Secretary Clinton, one that I'd say is unfounded. Equally importantly is the appearance of conflict of interest or the very real conflict of interest in Donald Trump's network of hundreds of millions of dollars of obligations to the Bank of China and to others in China.

(CROSSTALK)

KEILAR: But we're talking about Hillary Clinton. Senator, I hear you and I appreciate what you're saying. But we're talking about Senator Clinton -- pardon me, well, she was senator. Secretary Clinton. This is a real -- I mean, this is a real issue for her. This is something she has to deal with, which is why I want to talk about this with you.

COONS: That's right.

KEILAR: Isn't this something --

COONS: And that's why they've taken proactive steps and they've made commitments, both former President Clinton and Secretary Clinton, about how they will change.

[17:25:01] The Clinton Global Initiative, which has done terrific work, will have its last conference this September. They're not having conferences going forward. And they're changing the structure of the Clinton Foundation from whom they'll accept contributions, what kind of work they'll do. They're going to take a lot of their very valuable work and hand it off to other foundations.

I think it's unfortunate they're going to have to do this, but I think they are taking strong steps to make sure that there is no appearance of impropriety and no potential for future conflicts.

KEILAR: Should she have done this sooner?

COONS: Arguably because this is being raised as such an issue due to the double standard, yes, but I'll say that would have been a tragic step to take.

(CROSSTALK)

KEILAR: This is -- I mean, this is -- Senator, we've known that this has been -- I understand what you're saying, a tragic step to take is what you're saying because of the work that they done, of course. As you mentioned what they are doing now is something they could have done sooner.

COONS: That's right.

KEILAR: Which is spinning off some of these important initiatives because they also have a responsibility, of course, to those in all of this.

COONS: They do terrific work. I have seen the impact on the ground in Africa, of the work of the foundation, and the ways that they have been able to mobilize corporate and individual contributions and partnerships to really help people in some of the toughest parts of the world. And just -- I just want to emphasize one more time. There is no evidence that they personally benefitted from this. So a lot of the Trump campaign's --

KEILAR: But they've allowed there to be an appearance.

COONS: -- allegations here are distracting us from the real underlying issue.

KEILAR: Aside from Republicans saying that there is an issue, they have allowed there to be an appearance, and this is not something -- I mean, let's be honest, Senator. This did not just pop up yesterday. This is something that has been coming down the pike for years and this has been reported on years ago as something that would be an issue for Hillary Clinton were she to run for president.

COONS: That's right, and my hope is that folks will give her credit for being as transparent and forthcoming with releasing her taxes over the last 40 years, as they will be tough on Donald Trump for refusing to release his taxes for even a single year. There are things you know are coming when you run for president, like you're going to have to release your taxes. There are things you know are coming if you're going to run for president like there will be close scrutiny of all your different relationships and business engagements.

I'll just emphasize one last time. This is a charitable foundation that does good work. And Donald Trump still hasn't come clean about the network of his business ties to Ukraine and Russia, to China and to other countries where on the campaign trail he talks tough, but we don't yet know what steps he would take as president to begin to unwind those very complicating, profitable business relationships he currently has.

KEILAR: Senator Chris Coons, thanks for joining us here on THE SITUATION ROOM.

COONS: Thank you.

KEILAR: And coming up, Donald Trump is reaching out to minority voters as polls show him with very little support among African- Americans or Latinos. Can he turn the numbers around?

And terrorists on campus. Explosions, gunfire, and a deadly attack on a university. Officials say dozens of people may still be trapped, including possibly American faculty members.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[17:32:26] KEILAR: As Trump lashes out at Hillary Clinton, he's reaching out to minority voters. But after a pattern of insults and attacks, can he really win them over?

CNN senior White House correspondent Jim Acosta is digging into that. And, Jim, Trump is shifting his tone. But is it going to work?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think that is the question, Brianna. A senior adviser to Donald Trump says the campaign is looking forward, not back, in its outreach to minority voters. It's a new approach that the candidate sums up as, "What do you have to lose"?

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): With the polls showing he is in the single digits among African-Americans voters and trailing badly with other ethnic groups, Donald Trump is trying to hit a multicultural reset button.

UNIDENTIFIED REPORTER: What are doing to reach to minority voters? You've been talking a lot about Hispanics and African-Americans.

TRUMP: I think we're doing really great with minority voters.

ACOSTA: At his rallies in recent days, Trump is making the case it's the Democratic Party that's taking advantage of minority voters.

TRUMP: I'll be able to make sure that when you walk down the street in your inner city or wherever you are, you're not going to be shot.

ACOSTA: Trump's new pitch comes as he's teasing ahead to a new and perhaps softer policy on illegal immigration. A change that could appeal to not just Latinos, but other voting blocs turned off by the GOP nominee's super charged rhetoric on the issue.

TRUMP: There certainly can be a softening because we're not looking to hurt people.

ACOSTA: But even Trump's running mate Mike Pence could not describe what that updated policy will include.

GOV. MIKE PENCE (R), VICE PRESIDENTIAL CANDIDATE: Individuals who have committed crimes in this country are going to go and they're going to go very quickly, to be processed for a justice system and out of this country, and beyond that, I just think, you know, stay tuned.

ACOSTA: Still Trump's shift in tone is notable as he appears to be testing out a new outreach to Muslims.

KHIZR KHAN, GOLD STAR PARENT: Have you even read the United States Constitution?

ACOSTA: Just weeks after his clash with the parents of a fallen Muslim-American soldier, the Khan family.

TRUMP: Christians, Jews, Catholics, Muslims, everybody, you've got to get out and vote.

ACOSTA: At the same time, he's continuing to pound Hillary Clinton's use of a private e-mail server as secretary of state.

TRUMP: Hillary Clinton created an illegal, private e-mail server, deliberately, willfully and with total premeditation. Premeditation.

ACOSTA: That sounded like a wink to supporters who have raised bogus questions about Clinton's health. Even one of Trump's own surrogates says both Clinton and Trump should fully disclose their health records.

[17:35:04] DR. BEN CARSON, TRUMP ADVISER: You're going to have to have a lot of stamina and the ability to process a lot of information quickly, and we want to make sure that both candidates meet those qualifications.

ACOSTA: Even if the Trump family is still dead against releasing the GOP nominee's tax returns.

ERIC TRUMP, DONALD TRUMP'S SON: You would have a bunch of people who know nothing about taxes trying to look through and try and come up with assumptions on things that they know nothing about.

(END VIDEOTAPE)

ACOSTA: Now the other big question of the days is why on earth is Donald Trump campaigning in Mississippi? A deep red Republican state that he should win handily come November. This visit comes, Brianna, after he was in Texas last night, another reliably red Republican state. It is another campaign stop that has going to have Republicans back in Washington scratching their heads, but he is holding a fundraiser here in Jackson later this evening so he will accomplish one thing. He will be raising some money -- Brianna.

KEILAR: Yes, he's behind in the polls. They want him to go to these decisive states.

I want to break all of this done. First, though, I have to get in a quick break and we'll be talking in just a moment.

(COMMERCIAL BREAK)

[17:40:52] KEILAR: And we are back now with our political experts. Olivia Nuzzi, Mark Preston, and Dana Bash.

And I want to talk to you, guys, about the Clinton Foundation. There is increased criticism that we're seeing over this. And we -- we saw this happening years ago. We knew this was going to happen if Hillary Clinton ran for president. All of the people supporting her saying, hey, it does good work. There is a double standard. That's not the point, though. Isn't the point that this is becoming a problem for Hillary Clinton and aside from the actions the foundation is taking they need to do more?

MARK PRESTON, CNN POLITICS EXECUTIVE DIRECTOR: Yes. I mean, look, the foundation has done amazing work around the world. It's done great work here in the United States, but it does come down to the question, do the Clintons believe that they follow a different set of rules than the rest of America, than the rest of society? And there is a belief amongst many of the people who don't like the Clintons that that is true.

And the fact of the matter is even though that the foundation does do good work, let's look at it strictly from a political sense. This is a problem. We've been talking about it for three days now. We'll be talking about it tomorrow. Donald Trump decided not to have -- not to give that immigration speech. A lot of people criticized him for that. It was the smartest thing he's done in this campaign because then it would take the spotlight away from Hillary Clinton and the foundation and put it back to him and immigration.

OLIVIA NUZZI, POLITICAL REPORTER, THE DAILY BEAST: And it's very -- I mean, it's almost a Clinton sort of strategy decision. You remember after the convention, she stayed quiet for about a week while Donald Trump basically just hung himself in the press and made mistake after mistake so he seemed to learn a lesson from that. But obviously it looks terrible for her and at this point, I don't think -- she's doing well, obviously. She has the lead. But anything can happen in the next 75 days. And I think she should be cognizant of that and do whatever she can to make sure that she keeps that lead and keeping this foundation going, keeping these questions raised, I think just looks terrible for her.

KEILAR: And the Clinton campaign, Dana, seems to be a little worried about this having legs here.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Yes. I mean, clearly just the fact that the foundation moved late last week to try to stem the controversy by saying well, if she becomes president, then the foundation won't take donations from foreign entities or from corporations, where that actually just really seems to have made things worse when it comes to questions. I actually was pressing Robby Mook, her campaign manager, about this very thing, well, why is -- why was it OK for her to take these when she was the country's chief diplomat, her job was to deal with foreign countries, but not when she is president, which is, you know, it's sort of unclear? And also, why don't just do it now?

Now their answer is that it takes time for the foundation to unwind some of these -- some of these donors -- with some of these donors, I should say, that have kind of long standing relationships, and OK, that's fine. But you can say we're going to start to unwind it right now and I think it would certainly help to address the fact that a lot of these lines are very, very blurred and some of their corrections have in some ways made things harder to explain.

KEILAR: Yes. And I wonder what you think about -- I think people look at this, voters look at this. They look at the e-mails. They look at the paid speech to Wall Street. And they say, are these things that show us what a Clinton White House is going to hook like?

BASH: To me, I mean, you know, look, if you're Donald Trump and we've seen, that's exactly what they're arguing. This is precisely the kind of arguing. This is precisely the kind of Washington, everybody is scratching each other's back kind of situation that Donald Trump had successfully beaten his Republican opponents during the primary, using that argument, and obviously they believe that this Clinton Foundation situation plays right into that same theme, that the system is rigged and so forth.

Now to be fair, this is not about, you know, them getting personal gain. It just isn't. It is about a foundation that does good work but in many ways, you know, it doesn't matter when it comes to the concept of foreign entities being able to influence the policy -- potentially the policy of somebody by giving no matter where it is.

And coming up, a close call in the Persian Gulf. The U.S. Navy says Iranian vessels conducted a high speed maneuver near an American warship. We'll have details on this incident, which American officials are calling unsafe and unprofessional.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN Breaking News.

KEILAR: We do have some breaking news. It's coming in right now to THE SITUATION ROOM. Iranian Revolutionary Guard vessels have carried out what the U.S. Navy is calling a high-speed intercept of an American destroyer. This is in waters near the Strait of Hormuz.

[17:50:07] We have CNN global affairs correspondent Elise Labott who has details. You're learning some more information about this. This is just in. And also there are some pretty unbelievable pictures of what happened.

LABOTT: That's right. This is unbelievable, Brianna. This happened yesterday. We're talking about the guided missile destroyer. The USS Nitze, and they were doing this -- what the military is calling a routine transit through the Strait of Hormuz when four Iranian Navy vessels kind of come very close. We're talking 300 yards, Brianna. You can see the video where they're speeding in. All four of these Iranian vessels, Iranian Revolutionary Guard Corps, coming in towards the Nitze.

KEILAR: Are those flares? And it seems like they're shooting off warning flares, right?

LABOTT: Flares. And the Nitze they tried to attempt radio communications on 12 separate occasions. No Iranian response. As two of the vessels coming inbound, look at this rate of speed. Look how quickly they're coming in to this U.S. destroyer. Finally, they alter course as they come in 300 yards. We're talking about three football fields, Brianna. This is very concerning. And you can imagine how the U.S. Military forces aboard were seeing this.

(CROSSTALK)

KEILAR: I know you're working on this. You're going to come back with more on this. But when you see something like, and this isn't the first time we've seen Iran do something just kind of unbelievable like this, it's not as if those whoever is driving those vessels just came up with this on their own. Right? That's not the expectation.

LABOTT: Well, it was a target of opportunity. This is a routine transit in the Strait of Hormuz. And we've seen incidents like this before. Just last month there was the USS New Orleans with the CENTCOM commander Joseph Votel aboard when they did something very similar. Three incidents in the last year alone.

KEILAR: All right, Elise. We'll have you back with more. Thank you so much.

Now to a CNN exclusive. The Iraqi army is beginning a major push to overtake ISIS in the key city of Mosul. But the looming battle threatens to dramatically worsen the devastating humanitarian crisis.

Our senior international correspondent Arwa Damon has more.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The desert winds whip across the field. The heat is thick, suffocating, and the sand sticks to everything. Children's matted hair is shades lighter than it should be, their faces caked in dirt, nearly impossible to clean even if there was water.

(On camera): Inside this tent is a mother and her baby who we met a short while ago who is one of the cases that's really struggling here.

(Voice-over): Baby Almat is 9 months old. He has diarrhea, is dehydrated and listless, his mother tells us. The only drinking water they have from a well is making everyone sick. It's been more than a month since they got here after walking for hours.

This woman clutches a photo of her dead son killed by ISIS two years ago for being in the Iraqi Special Forces.

UNIDENTIFIED FEMALE (Through Translator): He's dead and they took everything. They left me and Rana (PH). This is the martyr's daughter.

DAMON: People are thirsty, unbearable especially for the children in this heat. Food is lentils and beans twice a day. There have been promises that international organizations were coming. The Iraqi government would be helping. But this attempt to preposition shelter and humanitarian aid is providing no relief.

As the front lines move towards Mosul, people are making a run for their lives along different points. This group, three sisters-in-law and other male relatives, saw the opportunity when the Kurdish Peshmerga pushed forward.

(On camera): There are very, very few details that they are willing to disclose publicly because of the shear risk involved to their family members that are still inside Mosul. But there is also potentially a very joyous moment here because two of these women were pregnant when ISIS arrived, when their husbands had to flee and very shortly their littlest children are about to meet their fathers for the first time.

(Voice-over): They don't want us to follow them to film that. But making it out does not mean an end to the hardships people continue to endure.

ELISABETH KOEK, NORWEGIAN REFUGEE COUNCIL: We are not able to provide them with the kind of services that they need because we simply don't have the land.

DAMON: And there is the issue of funding. $284 million was allocated during a flash appeal last month but the money has not yet been released. Already established camps have exceeded their maximum capacity. The Debaga camp in Iraqi Kurdistan has mushroomed to five times the size it was in May.

[17:55:03] Even with the expansions under construction in Debaga, it's barely enough for the current backlog and the offensive has not yet begun in Mosul itself.

KOEK: We have a rough estimate. It can be anywhere between a million and up to 1.5 million people coming out of the corridor from Mosul. So we are incredibly concerned and trying our best to deal with what might be the humanitarian catastrophe of the century.

DAMON: A catastrophe because we know this is coming. And preparing for the humanitarian disaster in the making should be as big a priority as preparing for the battle itself.

Arwa Damon, CNN, Kazakhstan, Iraq.

(END VIDEOTAPE)

KEILAR: Coming up, we are following two breaking stories. A terror attack at the American University in Kabul and Iranian ships intercepting a U.S. destroyer. We'll be right back.